Homework SourseKRAUSE INDUSTRIES Balance Sheet December 31 2016 Assets Curr
KRAUSE INDUSTRIES
Balance Sheet
December 31, 2016
Assets
Current Assets
Cash
$7,500
Accounts receivable
73,500
Finished goods inventory (1,500 units)
25,040
Total current assets
106,040
Property, Plant, and Equipment
Equipment
$40,660
Less: Accumulated depreciation
10,790
29,870
Total assets
$135,910
Liabilities and Stockholders\' Equity
Liabilities
Notes payable
$25,510
45,750
Total liabilities
71,260
Stockholders\' Equity
Common stock
$39,640
Retained earnings
25,010
Total stockholders\' equity
64,650
Total liabilities and stockholders\' equity
$135,910
Quarter 4
Total
Assets
Liabilities and Stockholders\' Equity
Budgeted data for the year 2017 include the following.
To meet sales requirements and to have 2,500 units of finished goods on hand at December 31, 2017, the production budget shows 9,000 required units of output. The total unit cost of production is expected to be $18. Krause uses the first-in, first-out (FIFO) inventory costing method. Interest expense is expected to be $3,500 for the year. Income taxes are expected to be 40% of income before income taxes. In 2017, the company expects to declare and pay an $9,550 cash dividend. The company’s cash budget shows an expected cash balance of $5,880 at December 31, 2017. All sales and purchases are on account. It is expected that 60% of quarterly sales are collected in cash within the quarter and the remainder is collected in the following quarter. Direct materials purchased from suppliers are paid 50% in the quarter incurred and the remainder in the following quarter. Purchases in the fourth quarter were the same as the materials used. In 2017, the company expects to purchase additional equipment costing $11,210. $8,393 of depreciation expense on equipment is included in the budget data and split equally between manufacturing overhead and selling and administrative expenses. Krause expects to pay $9,580 on the outstanding notes payable balance plus all interest due and payable to December 31 (included in interest expense $3,500, above). Accounts payable at December 31, 2017, includes amounts due suppliers (see above) plus other accounts payable of $10,020. Unpaid income taxes at December 31 will be $5,490. |
Solution
Krause Industries Budgeted Cost of Goods Sold For the Year Ending Dec 31, 2017 Direct Materials Used 62,500.00 Direct Labor 50,900.00 Manufacturing Overhead Applied 48,940.00 Total Manufacturing Costs 162,340.00 Add: Finished Goods Inventory - Dec 31, 2016 25,040.00 Cost of Goods Available for Sale 187,380.00 Less: Finished Goods Inventory - Dec 31, 2017 - 2,500 Units X $18 45,000.00 Cost of Goods Sold 142,380.00 Krause Industries Budgeted Income Statement For the Year Ending Dec 31, 2017 Sales - 8,000 Units X $32 256,000.00 Cost of Goods Sold 142,380.00 Gross Profit 113,620.00 Selling & Administrative Expenses 75,000.00 Income from Operation 38,620.00 Interest Expense 3,500.00 Income before Income Tax 35,120.00 Income Tax Expense - $35,120 X 40% 14,048.00 Net Income 21,072.00 Krause Industries Budgeted Retained Earning Statement For the Year Ending Dec 31, 2017 Beginning Balance, Dec 31, 2017 25,010.00 Add: Net Income 21,072.00 Sub-total 46,082.00 Less: Dividend 9,550.00 Ending Balance, Dec 31, 2018 36,532.00 Krause Industries Budgeted Balance Sheet Dec 31, 2017 Assets Current Assets Cash 5,880.00 Accounts Receivable - $76,800 X 40% 30,720.00 Finished Goods Inventory - 2,500 Units 45,000.00 Total Current Assets 81,600.00 Property, Plant & Equipment Equipment - $40,660 + $11,210 51,870.00 Less: Accumulated dep. - $10,790 + $8,393 19,183.00 32,687.00 Total Assets 114,287.00 Liabilities & Stockholders\' Equity Notes Payable - $25,510 - $9,580 15,930.00 Accounts Payable - $13,350 X 50% + 10,020 16,695.00 Income Tax Payable 5,490.00 Total Liabilities 38,115.00 Stockholders\' Equity Common Stock 39,640.00 Retained Earnings 36,532.00 Total Stockholders\' Equity 76,172.00 Total Liabilities & Stockholders\' Equity 114,287.00
